Iraqi oil: someone's gotta give

Iraq's recent oil auction was judged a failure because the government's terms were too harsh - the lone winning bid, by BP and CNPC for the giant Rumaila field, offered $2 per barrel of oil produced, was an order of magnitude below some other bids:
A consortium made up of ConocoPhillips, CNOOC and Sinopec was the only bidder for the 2.4bn barrel Bai Hassan field in the Kirkuk region in the north.

But ConocoPhillips, which bid $26.7 per barrel for output over the minimum, refused to match the ministry's estimated per barrel payment of about $4, said Hussain al-Shahristani, Iraq's oil minister.
Now, even the BP deal appears to be too generous for Iraq's oil workers:
The trade union representing workers of Iraq's state-owned Southern Oil Company (SOC) threatened on Thursday to prevent exploitation of one of Iraq's biggest oil fields by energy giants BP and CNPC.

"If those companies try to exploit the field, our first reaction will be to stage a sit-in and to strike," union president Ali Abbas told AFP.

[The union] fears a wave of layoffs, despite government assurances to the contrary.

"The contracts that the ministry (of oil) wants are service contracts which allow only 10 to 15 percent of employees (on the fields) to be foreigners," oil ministry spokesman Assem Jihad told AFP. "The remainder will be Iraqis."
With those assurances and such a stringent contract already in place, it is hard to see Iraq ever reviving its considerable oil potential unless someone, somewhere can bend.

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